Reader's Digest Association Inc. has acquired a majority interst in Source Telecomputing Corp. of McLean, Va. for an undisclosed amount of money.
The acquisition puts the publisher of the world's most widely circulated magazine among a number of publishing companies that have entered the computer-information field recently and also solves some major problems for STC, which started out with fewer resources than it needed.
In a deal consummated Tuesday night, Reader's Digest acquired 51 percent of the stock of STC, which markets The Source. The Source is a computer-information network that offers owners of home computers relatively cheap access to services, including the United Press International news wire, airline schedules, stock and commodity price information, language drill and electronic mail.
Although STC has had a product that has been acclaimed as a major development with as much potential impact as the telephone or television, the company has been plagued by creditors. The sale -- for "a significant amount of money," according to Source Chairman Jack Taub -- will go a long way to resolving some of those problems, he said.
Some of the proceeds will be used to pay creditors, he said.
A Reader's Digest spokesman called the acquisition "thoroughly consistent with our publishing philosophy." The privately held publishing company plans no immediate changes in the McLean company's operations.
"We couldn't have possibly found a better partner than Reader's Digest," said Taub. Taub said the publishing company would have representatives on the board of directors of STC and on its management committee, but STC will be operated as an independent company, he said.
"They've been looking into electronic publishing and the way the world is gong," he said. "They've been tracking us. Some of their people are on The Source, and they saw this as an opportunity to take one bold leap and put tehmselves on the leading edge of electronics," he said.
Taub said that the Reader's Digest investment would make it possible for The Source finally to reach its potential. "The baby's finally out of the incubator and crawling," he said.
Although other publishing companies are experimenting with computer-information systems, Taub said, the Reader's Digest venture is the boldest step into the field by a publisher. "Everybody's putting their toe in the water, but this is the real thing."
Taub bought majority control of the company in 1979, at a time when a North Carolina bank was calling on the United States government to make good a guarantee on a $2.9 million loan. According to Tuab, the company was near bankruptcy at the time.
Back then The Source was part of a firm called Telecomputing Corp. of America, which was a subsidiary of Digital Broadcasting Corp. Since then, however, Taub has separated The Source form TCA and DBC by setting up yet another corporation. "They're two totally separate corporations," Taub said of STC and DBC. But he added that the Reader's Digest investment in The Source will allow him more opprotunity to sort out DBC's problems.